APRIL CANCELS MARCH’S RISE IN RETAIL PRICES
Byline: Jim Ostroff
WASHINGTON — Apparently, March was a fluke.
After women’s retail apparel prices jumped 0.7 percent in March, many analysts said this largest-single-month increase since last October indicated an apparent end to a two-year price slump.
But when the Labor Department issued its April Consumer Price Index Tuesday, retail prices for women’s apparel dropped by 0.7 percent, the second-biggest, one-month decline in the past year, after January’s 1.2 percent plunge.
Consumers may love it, but retailers as a whole are none too thrilled with falling prices, which puts the squeeze on earnings and profits. Consequently, they were hardly pleased at the Federal Reserve’s decision Tuesday to hike interest rates by a half percentage point. This marked the sixth time since last June that the Fed raised interest rates in order to keep inflation at bay, although the previous increases were all quarter- percent hikes.
If the April report was not discouraging to those who were looking for women’s prices to rebound, they also were off by 1.8 percent from a year ago. In March, these prices fell by just 0.1 percent for the year, which was “the smallest decline on a year-over-year basis since the deflation in these prices began in November 1998,” a Labor Department economist said.
The biggest contributors to the renewed slump in retail prices for women’s apparel were the suits and separates category, down 0.5 percent in April and off 0.2 percent for the year, and underwear, nightwear, sportswear and accessories, which declined by 0.5 percent during the month and plunged by 2.4 percent for the year.
Retail prices for women’s dresses increased by 1.5 percent in April, but were down by 8.5 percent for the year.
By comparison, retail prices for all men’s apparel was off by 1 percent in April and down by just 1.7 percent from a year ago.
Overall, the CPI for all products was unchanged in April, after a 0.7 percent increase in March, which was due largely to a big runup in fuel oil prices. These costs began to decline in early April.
In focusing on the anemic performance in the women’s apparel sector, the agency economist said the April decline could be explained as “being due to the fact that Easter was relatively late this year, coming at the end of April.
“This meant that stores had sales pretty much throughout the month, rather than confining them to Easter week,” the economist said.
The economist concluded that “retail prices for women’s apparel are in a deflationary stage” with little on the horizon to indicate they will turn up any time soon.
“There is a great deal of competition from discounters and so the full-price department stores appear to be lowering their prices to compete,” the economist said.
Tracy Mullin, president of the National Retail Federation, warily greeted news of the Fed’s interest rate hike.
“I’m more nervous about this rate increase than the past ones,” Mullin said. “For starters, this increase is bigger and it comes fast on the heels of the other ones. At some point, there is a concern that the consumer will begin to say ‘Whoa! I have to start thinking about how I’m going to spend my money.”‘